Eastern Seaboard Report March 2015 – Prepared by Mark Bowling, Chairman ESB
Japanese car maker Suzuki Motor (Thailand) has yet to decide on the production plan for the second phase of its eco-car scheme despite winning Board of Investment (BoI) privileges last Nov 25. The company's current focus is to fulfil the obligation made to the BoI in the first eco-car scheme, president Takayuki Sugiyama said. Suzuki was one of five Japanese car makers along with Mitsubishi, Honda, Toyota, Nissan to apply for incentives under the first phase of the eco-car scheme launched in 2007, which attracted a combined investment of 28.8 billion baht. The company spent 8 billion baht in 2011 to invest in the first phase of the Rayong plant for the Swift, with annual production of 50,000 cars. Eco-car makers have voiced support for the state's reconsideration of the second phase of the eco-car scheme, urging instead a focus on hybrids and electric vehicles. Pitak Pruittisarikorn, chief operating officer at Honda Automobile (Thailand), said the company was gravely concerned about an automotive oversupply not only from eco-cars but from all vehicle types. "The eco-car scheme, in fact, does not support all automobile makers," he said. "Thailand's automotive industry has been developed for many decades to have a massive production for all segments covering pickup trucks, passenger cars and eco-cars, but neither domestic nor export demand is growing as expected." Mr Pitak said car makers in Thailand faced many negative factors, with future car demand stolen by the first-time car buyer scheme and the strong baht weakening export capability amid a stuttering global economy. Mazda Sales (Thailand) also joined Honda's calls for the government to promote high-technology vehicles such as hybrids or electric models. Ford Motor Co plans to boost sales of its pickup trucks in Asean markets this year by exporting more Ranger commercial vehicles built at its Thai factory. The car maker reported impressive sales last year in several Asean members including Thailand, Malaysia, the Philippines, Vietnam, Cambodia and Myanmar, said Matt Bradley, president of Ford Asean. He said Ford was keen to produce the Ranger at its joint-venture facility with MazdaAutoAlliance to serve rising demand from countries in Asean and Oceania. The Rayong plant has a production capacity of 140,000 pickup trucks per year, of which half are Ford vehicles. About 60% of Ford vehicles produced at the plant are for export. Despite the bright prospects for the automotive industry in Asia, the decision by General Motor (GM) to stop production in Indonesia and withdraw from the Eco Car programme in Thailand came as a shock to many in the industry. Industry observers are asking how the US auto giant can afford to miss out on two of the most lucrative markets in the world. Jeeranut Sangdee, director of communications for GM and Chevrolet Sales Thailand, said that stopping Chevrolet Sonic production at the Rayong plant and withdrawing from the government-promoted Eco Car programme would help the company in the long run. "Our decision to withdraw from the Thai Eco Car programme is part of regional positioning strategy to adjust the portfolio, narrow the product line and focus more on our core strength, which are pickup trucks and SUVs, not Eco Cars," she said.
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SET-listed Carabao Group Plc (CBG), the maker of Carabao Dang energy drink, is confident of achieving this year's revenue target of 9 billion baht after opening its own glass container factory in Chachoengsao. SAIC Motor-CP Co, a joint venture of Shanghai Automotive Industry Corporation and CP Group, this month introduced the MG3 hatchback, a new model to tap demand in the small-car segment. SAIC aims to sell 5,000 units of the Rayongmade car this year. Dealer network expansion will be crucial for the budding business, as people prefer a test drive before making a buying decision, said company president Wu Huan. "We got good feedback in terms of the brand and product from the MG6, our first model introduced in Thailand, but the biggest problem is the limited accessibility to potential buyers," he said. SET-listed developer Supalai Plc (SPALI) plans to launch 28 projects worth a combined 31.1 billion baht in a bid to have presales of 23 billion baht this year for growth of 19%. It has projects on hand in nine provinces — Chiang Mai, Udon Thani, Khon Kaen, Ubon Ratchathani, Chon Buri, Rayong, Songkhla, Phuket and Surat Thani. It will also launch a single-house project in Nakhon Ratchasima this year. InterContinental Hotels Group (IHG) is optimistic about Thailand's tourism outlook, with plans to add 11 more hotels here for a total of 28 by 2019. "The country welcomed 24.7 million visitors last year despite many negative factors. We see Thailand as our secondbiggest potential market in Southeast Asia after Indonesia." The 11 hotels planned for Thailand include two InterContinentals, four Holiday Inns, four Holiday Inn Expresses and one Hotel Indigo, several of which are planned for the Eastern Seaboard. Thailand and China this month signed an agreement covering joint construction and operation of two new standard gauge railway lines, from the Northeast to Bangkok and to the eastern seaboard. It sets down agreement on the joint construction and operation of the new railway, from the northeastern province of Nong Khai, which borders Laos, to two destinations - to Bangkok and to the Map Ta Phut industrial area of Rayong on the eastern seaboard. The line from Nong Khai via Kaeng Khoi to Map Ta Phut will be 734 kilometres long, and the branch from Kaeng Khoi district of Saraburi province to Bangkok 133 kilometres. The tracks will be of standard gauge, 1.435 metres wide, and allow trains to travel up to 180 kilometres an hour. The project cost is estimated at 328 billion baht. Songkran is just over three weeks away and Pattaya officials again are laying plans for the city’s official water-throwing and rice festivals.
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British Chamber of Commerce Thailand, 7 Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 038 427 771 Fax: 038 427 772 Email: mark.bowling@colliers.com www.bccthai.com
City Manager Wuttipol Charoenpol presided over the March 17 planning meeting for the April 18-19 “Wan Lai” and April 20 “Kong Khao” celebrations with officials from the Tourism Authority of Thailand local agencies. While people will be throwing water on anything that moves, and some things that don’t, starting as early as April 11, the official, sanctioned splashfest begins in Naklua’s Lan Po Public Park on April 18 at 7 a.m.
Nearly two years after it was originally scheduled to open, an automated parking garage has begun trial runs at Bali Hai Pier, offering free parking while the operator works out the bugs. Using a computerized-elevator system from by Simmatec Robotic of South Korea, the 738-million-baht garage offers 417 parking spaces on seven floors. Three hydraulic “Transo Devices” lift cars into and out of spaces. Each car must be shorter than 5.2 meters long, 1.9 meters tall and weigh no more than 2.3 tons. Vehicles also must measure no more than 13 cm. from ground to engine. (For insurance reasons it may be advised to wait until the bugs are ironed out )
The following news reproduced with kind permission of SATCC
Makro plans to open new branches in Koh Chang and Rayong before the end of the year The government is giving projects on the eastern seaboard a push as the area is home to many industrial estates and also attracts many tourists. Speaking after chairing the Eastern Seaboard Development Committee yesterday, Mr Arkhom said the funds would cover road, rail and water transportation development projects. Aviation and the Thai-Chinese joint dual rail development projects are excluded. He said one of the most urgent road projects is the 32km motorway linking Chon Buri's Pattaya with Rayong's Map Ta Phut which is estimated to cost 20.2 billion baht. Of the total, 14.2 billion baht will be allocated from the motorway fund to finance construction and the rest will be sought from the cabinet to pay for land appropriation fees. "The Pattaya-Map Ta Phut motorway project is expected to be submitted to the cabinet for approval soon. Construction is scheduled to begin late this year," he said. Mr Arkhom said the Finance Ministry is not opposed to the Transport Ministry's plan to use the motorway fund but the spending needs to be approved by the cabinet. The committee has also agreed to accelerate efforts to better tackle traffic congestion around Laem Chabang port. It is hoped an elevated road at Nong Kham will ease traffic woes when it is completed in August this year. He also said the estimated cost of the planned 106km dual-track route from Chachoengsao to Saraburi's Kaeng Khoi is being reviewed. Bidding is expected to proceed this year. The construction cost is initially th
British Chamber of Commerce Thailand, 7 Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 038 427 771 Fax: 038 427 772 Email: mark.bowling@colliers.com www.bccthai.com
estimated at 11.3 billion baht. Transport Minister Prajin Juntong said the development of transport networks in the coastal provinces is essential because of their contribution to the economy. However, he said the development projects must be carefully planned to help boost connectivity while minimising impacts on the environment and community. He noted the primary network is designed to accommodate transport by cargo trucks while the secondary network is to accommodate smaller vehicles. ACM Prajin said the Trat provincial airport will also be developed to serve U-tapao airport in Rayong. The National Economic and Social Development Board and the Office of Transport and Traffic Policy and Planning Office will conduct a study on runway and terminal expansion at Trat airport. He added that a memo of understanding on the development of U-tapao airport between the Transport Ministry and the Royal Thai Navy is being drafted. Once ready it will be submitted to the navy for consideration before both sides can sign the agreement. U-tapao airport, which is under the jurisdiction of the navy, is one of the four airports being eyed for development into an "aviation industrial estate". The other three are Nakhon Ratchasima airport, the airport at the air force's Flying Training School in Nakhon Pathom, and Suvarnabhumi airport in Samut Prakan province. Driven by unabated demand from Japanese expatriates, Si Racha, a coastal town in Chon Buri, continues drawing new investment in serviced apartment, hotel and condo projects from Bangkok-based developers. New projects this year include a 6-billion-baht serviced apartment and hotel by V.M.P.C. Co; Nusasiri Plc's Nusa Sriracha condo and hotel worth 4.3 billion baht, and the 460-million-baht Casa Condo Sriracha. According to property consultant Knight Frank Chartered (Thailand), there were 2,432 serviced apartment and hotel rooms from 22 projects in Si Racha as of the end of 2014, with 76% in Si Racha. Of the total rooms, 61% were operated by individual investors and 39% by local brands like Kantary, Kameo, Cape and Karavel by the Kasemkij Group, owned by the Pangsrivong family. There had been no international hospitality chains in Si Racha until early this year with the entry of Singaporean operator The Ascott Ltd, a wholly owned subsidiary of Singapore's large developer CapitaLand. Launched in mid-January, the 136-room Citadines Grand Central Sri Racha is the first property Ascott operates outside Bangkok, where it has around 1,800 rooms at nine properties. Ascott saw potential in expanding to the Eastern Seaboard. Thai conglomerate Saha Group is developing a serviced apartment and condo in Si Racha on a 12-rai site near Motorway No.7 close to its first community mall, J-Park, which opened last year. Eastern Water's operation in Rayong province is the main supplier of raw water to industries and consumers in the eastern part of the country.a The two are Global Power Synergy Co , a power-generating firm that is a subsidiary of national oil and gas conglomerate PTT Plc; and Universal Utilities Co , a waterworks manager and a subsidiary of SET-listed Eastern Water Resources Development and Management Plc. GPSC is expected to launch its initial public offering and start trading by May, expecting to raise capital of 8-10 billion baht. Thanks to tax disparities for cars in Thailand, so many imports don't make sense when they are compared with locally made counterparts in sheer price terms. Take the BMW X4, as one example. While it's understandable that this sporty version of the X3 compact SUV — like what the X6 is to the X5 mid-size SUV — has to be pricier than the donor vehicle, the X4 th
British Chamber of Commerce Thailand, 7 Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 038 427 771 Fax: 038 427 772 Email: mark.bowling@colliers.com www.bccthai.com
is a good 1.5 million baht dearer. The significant price difference is obviously the result of the X3 being bolted together at BMW's Rayong plant, despite being powered by the same engine. Worse, the X4 is still 500,000 baht more expensive than the X5, another BMW finished at that same Thai factory. TICON GROUP yesterday announced a five-year, Bt50-billion investment plan covering expansions of Ticon factories and TPark logistics warehouses in Thailand, Indonesia, Myanmar and Vietnam. Virapan Pulges, managing director of Ticon Industrial Connection, said this year marked the 25th anniversary of Ticon's factory and warehouse rental business and there will be more to do on the Eastern Seaboard. Ducatisti Co, the authorised importer and distributor of Italy's Ducati motorcycles, forecasts tepid sales this year due to stiffer competition and tightened hire-purchase rules. Forecasts sales of Ducati motorcycles will increase by only 5-7% this year from 3,057 sold last year, itself a 22% increase from 2013. Ducati Motor (Thailand), the local manufacturing arm of Italy's Ducati Motor Holding SpA, now makes 5,000 motorcycles a year at Rayong's Amata City Industrial Estate, with 50-60% of production slated for export. Charoen Pokphand Group (CP) and Thai Beverage Plc (ThaiBev) may invest in the country's first high-speed train, Prime Minister Prayut Chan-o-cha said recently. This includes the Bangkok to Pattaya railway. Hotels in the Pattaya area will offer discounts of up to 50% on rooms from April to October for Thais only - in hopes of replacing falling numbers of visitors from Russia and Europe. Sanphet Suphabuansathien, president of the Thai Hotels Association Eastern Region, said the number of guests from major markets like Europe and Russia had dropped by about 30%.
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British Chamber of Commerce Thailand, 7 Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 038 427 771 Fax: 038 427 772 Email: mark.bowling@colliers.com www.bccthai.com